Bitcoin falls nearly 8% as cryptocurrency slide continues

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Bitcoin fell by nearly 8 per cent during an hour of frenzied trading on Thursday afternoon in the US, extending a day of losses that have reversed most of the cryptocurrency’s gains since June.

The price of a token briefly fell to as low as $25,409, according to data from CoinMarketCap, before staging a partial recovery.

The whipsaw price action left the digital asset changing hands for 15 per cent less than the $31,814 high registered in July, echoing recent declines in stocks, bonds and other financial assets.

The sell-off coincided with a report in The Wall Street Journal stating that Elon Musk’s privately held SpaceX venture had written down the value of its bitcoin holdings by $373mn in the past two years and had sold the cryptocurrency.

Digital asset traders have kept close tabs on Musk since 2021, when his electric-car company Tesla briefly flirted with accepting payment in the cryptocurrency.

Bitcoin jumped 15 per cent in a single day when Musk announced the plans in February that year. Tesla also ploughed $1.5bn of its own cash into the tokens.

But the cryptocurrency registered a sharp reversal when Musk abandoned the plans three months later. Since then, the value of the carmaker’s own holdings has fluctuated. Tesla last year recorded $204mn in impairment losses related to its bitcoin holdings.

Thursday’s gyrating bitcoin price follows on the heels of a torrid few months for digital currency enthusiasts, as US regulators crack down on a sector that Securities and Exchange Commission chair Gary Gensler has said is “rife with fraud, scams and abuse”.

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In June the SEC filed lawsuits against two big cryptocurrency exchanges, Binance and Coinbase, claiming they had broken the law by selling digital tokens to members of the public without filing the required registrations.

Those enforcement actions heralded volatility in digital assets, even as the companies denied the allegations and vowed to defend themselves in court.

At the same time, a resilient US economy has forced traders to reassess expectations that the Federal Reserve will soon begin cutting interest rates.

Stocks and bonds have fallen since the Fed raised its benchmark interest rate to the highest level in 22 years last month, while leaving the door open to further increases this year.